What is Tether?
Tether, the digital currency version of the US dollar USD, was launched by Tether Ltd in 2015. Developers claim that the value of the token is secured by the US dollar. The main idea of this project was to provide participants of cryptocurrency exchanges the opportunity to use a stable digital asset (stablecoin). Tether USDT is tied to the actual price of the US dollar USD.
Tether was released on the Omni Layer Protocol (platform), an add-on to the Bitcoin blockchain , and works on both the Omni Layer and on the Ethereum protocol (ERC-20 tokens).
How does Tether stay on $1?
Tether is secured by actual currency assets in the reserve account of the Tether platform - Each Tether is 100% backed in a one-to-one ratio by the fiat currency unit held in deposit by Hong Kong based Tether Limited (i.e. one Tether USDT equals one US dollar). However, on April 30 2019, Tether Limited announced that only 74% of the tokens are secured by US dollars, as opposed to 100%, a belief held by most of the cryptocurrency community. The price for 1 USDT in the market very rarely deviates from 1 US dollar.
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What is Tether used for?
Tether USDT converts fiat funds into digital currency, tied to the value of the US dollar USD, in the same way that EURT is tied to EURO (EUR) and JPYT is tied to Japanese Yen (JPY).
Tether combines blockchain technology with fiat currencies, allowing you to take advantage of blockchain features using a currency backed by the US Department of the Treasury or the European Central Bank. Tether Ltd converts the US dollar USD into digital currency USDT and then transfers this digital dollar into the blockchain.
Recently, developers have launched a new stablecoin: Tether Gold (XAUT). Cryptocurrency stability is ensured by a natural gold reserve. A digital analog of precious metal can be exchanged for real gold. The new cryptocurrency is available on the Ethereum (ERC-20 Standard) and Tron (TRC20 Standard) blockchains.
The main goal of Tether USDT is to make conversions between cryptocurrencies and fiat currencies much easier.
There are many different companies in the cryptocurrency industry. Tether is integrated with many of them. For example, one of Tether’s key partners is Coinsbank. With Coinsbank, you can use debit cards to make payments in USDT (or EURT).
Tether is based on strict adherence to international standards and laws. The company operates in all countries where digital (virtual) currencies are regulated. Сustomers checking documents, maintaining and following all legislative procedures helps to ensure the comfort of partners. Tether Ltd systematically carries out professional audits, providing additional user security.
Tether USDT is easy to use. All operations are carried out in a cryptographically secure environment, accessible by both individuals and legal entities. Tether USDT integrates seamlessly with wallets and other companies, such as Bitcoin, providing decentralized sharing, high-level security, and transparency.
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How does USDT Tether work?
The principle of Tether USDT is simple. The Omni Layer Protocol (Mastercoin) is open-source software that interacts with the Bitcoin blockchain. The protocol provides the issuance and redemption of cryptocurrency tokens based on the Bitcoins used to create digital tokens. Tether transactions are hashed and conducted through the Bitcoin blockchain, where they are verified by miners as well as other Bitcoin transactions. Each Tether transaction in Omni is recorded in a BTC transaction, shares the same transaction hash, and is confirmed on the Bitcoin network. The average transaction confirmation time is 10 blocks.
The Omni Layer Protocol uses the Bitcoin blockchain to add additional features:
Decentralized Peer-to-Peer Exchanges
Mobile Tether Wallet
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The main advantages of The Omni Layer Protocol are the security and stability of the BTC network. Omni nodes are also Bitcoin nodes. As a result, the security and reliability of the Bitcoin network are also increasing.
All Tether USDT in Omni Layer are “tokens” in the BTC blockchain. Any wallet or exchange that supports BTC transactions will automatically support Tether USDT transactions. No software upgrades are required.
The use of the Bitcoin blockchain has its drawbacks:
Low Transaction Speed
Block Size limit
Not so long ago, Tether made the integration to the Ethereum blockchain according to the ERC20 standard. Tether USDT Wallet ERC20 has become compatible with dAPPs. Significantly increased transaction speed (15 seconds on the Ethereum network vs 10 minutes on the Bitcoin network). The commission becomes less.
ERC-20 stands for Ethereum Request for Comments. This is the official protocol of Ethereum for receiving proposals to improve the blockchain. The number “20” is the identification number of the proposal. Most of the popular crypto tokens are based on this standard.
Ethereum tokens used to have unique smart contracts, however many of them had compatibility issues. In order for exchanges and wallets to support each new token, developers had to write a completely new code. Once thousands of different tokens had appeared, the problem became very serious. The advent of the ERC-20 standard has solved this problem.
Tether works on three protocols. When sending funds, make sure to verify the address of the recipient. Omni Tether address starts with "1" or "3" – just like Bitcoin addresses. Thether ERC20 address starts with "0x". Tether TRC20 starts with "T".
Very important: you cannot send money to the Ethereum network from the OMNI network. You also cannot send or exchange your ERC20 USDT to OMNI USDT.
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